Procurement needs to embrace agile innovation in times of crisis

Disruptive Innovation

It is fair to say that Covid-19 has disrupted businesses and economies in a way unlike any other global event. Although it is humbling to see communities changing their behaviours in the face of the pandemic to help save lives, it is equally sobering to witness the speed at which certain industries have been crumbling in the face of the sudden drop in demand for their goods or services.

Not all industries, of course, have been impacted in the same way. On the one end of the spectrum, we’ve seen industries where demand has declined almost overnight (e.g. hospitality, transport). And on the other, we have seen industries witness an overwhelming and sudden surge in demand (e.g. PPE, pharmaceuticals & medical, public services). That is not to say that those in the middle haven’t also had to dramatically change their operations, or pivot their production lines or service models to accommodate consumers’ changed behaviours (e.g. retail, financial services).

Like with all big challenges, there are opportunities ripe for the forward-thinking businesses to take hold of. And central to creating successful outcomes from this crisis is the organisation’s ability to deliver at pace. procurement and supply chain management will, of course, be central to this, and this function, more than any other, will need to step up and embrace agile innovation.

Why Procurement?

Procurement has long been the important bridge between third-party suppliers and the rest of the business. When consumer demands are disrupted, the business comes to the procurement team with new product ideas that will require materials, services and even innovation from external parties. Likewise, when the market is disrupted, this will present procurement teams with challenges to ensure continuity of supply. And critical to the success for those businesses that pivot or reinvent themselves is pace. The ability to source and secure those supplier connections faster than competitors do can be the single determining factor that separates the leaders from the laggards.

What is agile innovation in procurement?

In these times of reinvention for the business, procurement teams don’t have to completely reinvent themselves; they can adopt the same techniques and methods that have been tried and tested, it just needs to be done faster.

Category management: When the business needs to source rapidly, in a way that best meets its requirements, buyers can present tried-and-tested processes and a framework that will enable the organisation to operate at pace and with confidence.How can steps be taken to source and manage spend cross-functionally, at pace?

Make or buy: If the organisation suddenly cannot source an essential good or service, buyers may need to assess whether they can use acquire the good internally; from a nontraditional supplier, such as a university; or in partnership with a direct competitor.How can the company think outside the traditional supply base to source what it needs?

Supplier relationship management (SRM): Facilitating conversations between business partners and potential third-party suppliers that encourage collaboration requires established methods to set up constructive discussions and track the progress of the relationships being built.Who are our critical suppliers? How can those relationships be strengthened? How can innovation be leveraged from external parties?

Risk assessment: Rapid sourcing during a volatile time will require closer and more frequent risk analysis and reporting to ensure that any at-risk suppliers are managed, supported or replaced before the disruption impacts the organisation’s ability to operate.How can supplier risk be assessed? How frequently should those assessments occur?

So I implore my procurement colleagues to embrace the challenge - to trust in the function’s methods and abilities, and demonstrate true corporate leadership through cross-functional collaboration and agile innovation.